Open Trade Season: Ten Steps for Job Creation

By Barr McClellan

America needs balanced trade.  Three years ago, the imbalance reached almost one trillion dollars per year.  The latest numbers show the imbalance is getting worse again, now at $600 billion per year.

Every one billion “deficit dollars” represent 20,000 “deficit jobs.”  These are jobs lost to outsourcing, to other nations. The economy is paying close attention. Recently, the trade deficit was adjusted to show an even greater imbalance.  The market took a dramatic downturn, falling 265.42 points, or 2.49%. The problem with the deficit is free trade. “Free” is a misnomer.  For the United States, our exports are free and open.  From too many of our trading partners, imports to us are corrupt and closed.  

Free trade has done what it was supposed to do.  Starting in 1945, the United States embarked on globalization. With Pax Americana, the job was done.  Since 1990, substantial changes have been necessary. Trade kept expanding but so did the deficit carried by the United States.  As the deficit worsened, the time arrived to change to open trade. The world’s nations needed to open up.  They did not. The deficit worsened.  The economy collapsed.

The impact of so-called free trade and its huge imbalances has been in business and jobs.  After two years of grants and incentives, the economy is dead, there are no jobs, unemployment is over 9% and malaise has returned.

Washington has tried and failed.  The time has arrived to take new steps.  Of a variety of available new steps, centered on reducing deficits, retrenching government, and encouraging free enterprises to create jobs, improving the trade deficit is easiest. There are ten steps government needs to take to bring more jobs to the U.S.:

1. Buy American products: The heart of the issue is to promote American business, not overseas companies.  Government purchases should be from American business.  America for Americans.

2. Adopt tax adjustments: Pofits earned and banked overseas should be taxed.  Eliminate the overseas tax havens.  Reduce the incentives to stay outsourced.

3. Adopt tax incentives. Provide tax breaks for keeping business here and for bringing business back.  Keep American money here and bring what is overseas back.

4. Promote disclosure for open trade: Disclosure is the first big step to globalized open trade.  Nations on the many corruption lists have to open their government policies and procedures. We need to know where the bribes are and where they go.

5. Open trade requires parity: America is open, disclosing the terms for global trade.  Other nations have to reciprocate by adopting similar terms.  If not, America should impose similar restrictions.

6. Open trade requires a level playing field: If other nations refuse to remove restrictions on American exports, the positive alternative is to reduce the burden on American companies.  We compete on equal terms, and we will win.

7. Keep American money here: Do not support overseas businesses with loans or guarantees.  This restriction would apply to nations failing to disclose the benefits to their companies.

8. Reduce foreign aid: The United States is no longer the only economic power on the globe. Several other nations or common markets have to provide what we invest to support trade.  If not, we cut back or eliminate the money.

9. Restrict grants to open nations: Money for medical or other public services should be provided only to nations who open up.  If we are able to compete on parity with their businesses, additional progress will result.

10. Promote American free enterprise: This is perhaps the most important and the most ignored.  On request, we tell Washington what should be done.  Key examples are reducing corporate taxes and expensing capital improvements. Washington ignores the advice. There are many additional steps to promote the private sector.

For the leaders in our capital, these ten steps are ignored.  We tried to obtain legislation for adjust tax incentives.  The bills were not introduced.  We recommended to the Deficit Commission that burdens on free enterprise be adjusted to encourage business.  One solution solves two problems – the budget and the trade deficits.  There has been no reaction.

Washington has problems with solutions.  There have been no results for two years now. We need to open up our free trade. Washington promotes exports but not imports.  The trade imbalance worsens. Jobs continue to disappear.  The real tragedy is with the unemployed and those who dropped out of the search. The greatest of personal and family losses continues.

A “bonus” step has to be outside Washington, away from the national beltway.  The grass roots movement to buy USA has been around ever since textile mills started outsourcing in the 1950s.  America’s manufacturing base fell from 34% of the economy to only 13%. The total trade deficit since 1980 is $6.2 trillion.

Americans see this real world of loss. Economic reports are not needed. The nation took action. Americans determined to support Americans. The best way is to learn how to buy American products.  There are four main markets – local, statewide, national and Internet.  Trade policy is government policy.  Buy American by Americans is an individual’s free choice.  Direct your purchases to American companies and American products.  Polls show 99% of Americans prefers buying from Americans.

Individuals have the power to do the job. Many nations promote buying their products. Even China has Buy China. We have every reason to reciprocate.

Most important, by getting the American economy going, we will also help the global economy.  The United States is the world’s largest consumer economy. We spend more than any other nation.  When we are back up, the world moves up with us.

The basic solution for Washington and for individual Americans is Go America First.

Barr McClellan has broad experience in business, the courts and politics, notably as a personal attorney to President Lyndon Baines Johnson. He is the author of Made in the USA: Corporate Greed, Tax Laws and the Exportation of America's Future.

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